1. Field of the Invention
The present invention relates to a method and system for preventing parallel marketing of wholesale and retail items, and more particularly to a method and system for detecting the source (e.g., a first merchant) from which a second merchant has received (e.g., directly or indirectly) goods for re-sale, and for subsequently preventing such a transfer of the manufacturer""s goods.
2. Description of the Related Art
In commerce, oftentimes, a manufacturer""s goods are trans-shipped from a first merchant, which is usually a xe2x80x9clegitimatexe2x80x9d wholesaler or retailer, to another merchant which is usually not legitimate. The first merchant is xe2x80x9clegitimatexe2x80x9d in terms of being generally licensed by the manufacturer to sell the manufacturer""s goods in a market under terms defined by the manufacturer.
In so-called xe2x80x9cparallel marketingxe2x80x9d, the first merchant (e.g., generally legitimate or licensed) sells the manufactured goods to a second merchant (e.g., generally unlicenced) who can then create a market independent of the manufacturer. This practice makes it possible for the unlicenced merchant to undersell the licensed merchants operating legitimately in the local marketplace. The party typically in violation in this transaction is the first merchant since reselling to a second merchant generally violates the contract agreement between the manufacturer and the licensed merchant.
The concept of parallel market (also called xe2x80x9cgrey marketxe2x80x9d and xe2x80x9cdiversion marketxe2x80x9d) as briefly described above is a widespread phenomenon that costs the manufacturers of goods billions of dollars per year.
Therefore, it is very important for the manufacturer to be able to locate the source of the merchandise involved in diversion in order to stop the practice as well as to take possible legal action if the manufacturer can show that a contract has been violated.
More importantly, the manufacturer desires that the goods be sold legitimately and at a price appropriate to market conditions in the area of sale. Otherwise, other licensed merchants within the area may be undersold and driven out of business, and at the very least would become lesser customers for the manufacturer.
Further, another source of grey market goods is stolen merchandise.
Generally, an important ingredient of an anti-diversion mechanism is to mark the products with the identity of the merchant to which the manufacturer sends the goods (for simplicity, a very simple supply chain is assumed, but the present invention described below is easily adapted to more general cases by using routing information adapted to the case at hand).
Additionally, the mark must be difficult to erase. This problem is well known. Further, either the mark should also be very difficult to imitate (as the parallel marketeer could otherwise confuse the search for the source of diversion by imprinting the marks corresponding to several legitimate merchants) or additional (fake) marks should be recognizable as having been placed after the original ones.
Both problems are very easily solved for products where the routing can be decided at an early stage of the manufacturing or even the packaging process. The difficulty resides with the very numerous products where marking has to be performed during a late stage of packaging.
Materials for tagging or identifying explosives and other chemical commodities are known. Similar tagging, recognizable visually, or by some form of spectral analysis, are offered as solutions for protection against counterfeiting and parallel markets. While taggants are rather efficient when mixed with the product (as in chemicals, gasoline, explosive, and some beverages for instance), they are less efficient for articles such as luxury goods and electronics.
However, none of the known methods addresses ways in which these tagging materials or xe2x80x9ctaggantsxe2x80x9d can be utilized in conjunction with consumer merchandise for protection against parallel marketing practice. At best, they are somewhat difficult either to erase or imitate but when imitated they do not provide a means for differentiating between the original and the fake or counterfeit ones, hence which taggant was the first to be inserted or should act as the true identifier.
In view of the foregoing and other problems of the conventional methods and systems, it is an object of the present invention to provide a unique means (e.g., a coating and/or a code) for distinguishing products that are sent from a manufacturer to individual merchants. Here, a unique identifier (e.g., code) is assigned to each one of the many merchants receiving goods from the manufacturer.
With this type of coating and/or code, the manufacturer is able to trace the merchandise back to the first licensed merchant should the product appear for sale by an unauthorized merchant using spectroscopic techniques to identify uniquely placed elements within the coating.
Preferred materials for the coating include either organic resin or polymer. The organic polymer preferably includes one epoxy, organo-silanes, and cellulosics, containing at least one chemical marker. The chemical marker preferably includes at least one rare earth element.
Preferably, the coating has a thickness substantially within a range of about 0.1 micron to about 10 microns, and more preferably from about 0.1 micron to about 1 micron, and most preferably about 0.1 micron.
Such preferred materials and dimensions are equally applicable to all embodiments of the present invention described below.
In a first aspect of the invention, a method for detecting parallel marketing of an item, includes forming at least one of a coating and a code on the item, interrogating the coating and/or the code, and determining from the interrogation whether the item has been transferred from an authorized merchant to an unauthorized merchant
With the unique and unobvious method and system according to the present invention, the source (e.g., an authorized, licensed first merchant) from which a second merchant has received (e.g., directly or indirectly) goods for re-sale can be easily and reliably detected. Once detected, the manufacturer can take appropriate action to stop the practice or even take legal action against the licensed first merchant for breach of contract or the like. Hence, parallel marketing of wholesale and retail items can be effectively detected and deterred.